In the recent past we noted [6] the somewhat startling reality that "the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045." While mathematics is our tool - as opposed to the mathemagics of some of the more politically biased media who did not like our message - the painful reality in America is that: for increasingly more Americans it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is such an important topic that we felt it necessary to warrant a second look. The graphic below quite clearly, and very painfully, confirms that there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income. With the ongoing 'fiscal cliff' battles over taxes and entitlements, this is a problematic finding, since - as a result - it is the US government that will have to keep funding indirectly this lost productivity and worker output (via wealth redistribution).

As we noted before (details below):

We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and... have the same disposable income at the end of the day.

Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result in even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled "Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law [8]" which carries a chart of disposable income by net income comparable to the one above.

But perhaps the scariest chart in the entire presentation is the following summarizing the unsustainable welfare burden on current taxpayers: For every 1.65 employed persons in the private sector, 1 person receives welfare assistance For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.

The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.

And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago [11]:

We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.

But for now, just stick head in sand, and pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.

oh absolutely....look at people's food carts.....here we buy the basics on sale, and some just come and buy tiny sizes of name brand stuff that you know is a lot more expensive than store brand.....

but why would these graphics upset anyone?......deep down there are so many Americans who look at work as a joke.....why not stop working and enjoy your home and your family....have USam pay you unemployment for 3 yrs and then apply for disability....

believe me, my sil/bil have done very very well on their various "disabilities"......sports cars, extra houses, property, truck, suv, etc etc.....

Nail on the head. We have become the ultimate nanny state welfare nation on the planet. Europe is not even in our league. In Europe the moocher class is actually expected to pay something in taxes for the freebies they get. We just give it away for free. I have started to flirt with the idea that maybe we should raise taxes, for those laying in the hammock. Let the Bush tax cuts expire completely. Be it an increase in rates or a reduction in deductions the job creators are going to pay more anyway, from Obama or Boehner. They just disagree on how. I say if one class has to pay more than everybody pay more. I hate to say it, but Reagan killed us by removing people from the tax rolls. It was a poison that has led us to where we are. As long as half the country gets a free ride there is no stopping the runaway train of big government. Either get more people back on the tax rolls, or take the free loaders off the voter rolls. The Founding Fathers never seem to amaze me with their wisdom. Now we know why they had property qualifications for voting. It is almost like they could see 236 years into the future.

And those getting taxpayer funded jobs - They don’t have any taxes withheld from their paychecks.

They get the straight cut as to what they earn. On their pay stubs, will be a statement saying......”you are being subsidized by your hard working fellow citizens, do honor to their sacrifice for you.”

Just to emphasize their status in the food chain.

12
posted on 12/02/2012 1:36:50 AM PST
by onona
(It's a good day to celebrate life, so I shall !)

I am seriously considering how I can “go Galt”. Both my wife and I now work and have good jobs, she can retire next year (I’ve got 5 more years). We have no debt. Why should I continue to work to feed the beast?

As much as on one level I agree 100% with what you’re saying, it overlooks completely that Americans who vote, have shipped millions of jobs overseas, leaving an ever greater portion of Americans on the dole.

I think exactly the same thing. And it begs the question: Will the government seize my 401(k)? Will my retirement be any better than my neighbor’s? I work harder and they live better (for now). Will that pattern continue into old age? Because if it does, I sure am a sucker for being a productive person.

20
posted on 12/02/2012 7:59:26 AM PST
by ClearCase_guy
(Global Warming is a religion, and I don't want to be taxed to pay for a faith that is not mine.)

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